The Internal Revenue Service is suspending certain income limitation
requirements under § 42 of the Internal Revenue Code for certain
low-income housing credit properties in Florida as a result of the devastation
caused by Hurricanes Charley, Frances, Ivan, and Jeanne. This relief is being
granted pursuant to the Service’s authority under § 42(n)
and § 1.42-13(a) of the Income Tax Regulations. This notice amplifies
and supersedes Notice 2004-66, 2004-42 I.R.B. 677.

BACKGROUND

On August 13, 2004, September 4, 2004, September 16, 2004, and September
26, 2004, respectively, the President declared major disasters for the State
of Florida as a result of Hurricanes Charley, Frances, Ivan, and Jeanne.
These declarations were made under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, Title 42 U.S.C. 5121-5206 (2000 & Supp.
I 2001). Subsequently, the Federal Emergency Management Agency (FEMA) designated
counties for Individual Assistance.

On September 16, 2004, the Service issued Notice 2004-66, which, because
of the widespread damage to housing caused by Hurricanes Charley and Frances,
temporarily suspended certain income limitation requirements under § 42
for qualified low-income housing projects in the State of Florida.

The State of Florida has requested that the Service extend the relief
granted in Notice 2004-66 (applying to Hurricanes Charley and Frances) to
allow owners of low-income housing credit projects in the State of Florida
to provide temporary housing in vacant units to individuals displaced because
their homes were destroyed or damaged as a result of the devastation caused
by Hurricane Ivan or Jeanne.

SUSPENSION OF INCOME LIMITATIONS

Because of the widespread damage to housing caused by Hurricanes Charley,
Frances, Ivan, and Jeanne, the Service has determined that it is appropriate
to temporarily suspend certain income limitation requirements under § 42
for qualified low-income housing projects in the State of Florida that are
beyond the first year of the credit period under § 42(f)(1). The
suspension will apply to low-income housing projects, approved by the Florida
Housing Finance Corporation, in which vacant units are rented to individuals
displaced by Hurricane Charley, Frances, Ivan, or Jeanne (displaced individuals).
The Florida Housing Finance Corporation will determine the appropriate period
of temporary housing for each project, not to extend beyond September 30,
2005.

During the temporary housing period established by the Florida Housing
Finance Corporation, the status of a vacant unit (that is, market rate or
low-income for purposes of § 42) that becomes temporarily occupied
by a displaced individual remains the same as the unit’s status before
the displaced individual moves in. Displaced individuals temporarily occupying
vacant units will not be treated as low-income tenants under § 42(i)(3)(A)(ii)
(a low-income unit that was vacant before the effective date of this notice
will continue to be treated as a vacant low-income unit even if it houses
a displaced individual and a market rate unit that was vacant before the effective
date of this notice will continue to be treated as a vacant market rate unit
even if it houses a displaced individual). Thus, the fact that a vacant unit
becomes occupied by a displaced individual will not affect the building’s
applicable fraction under § 42(c)(1)(B) for purposes of determining
the building’s qualified basis, nor will it affect the 20-50 test or
40-60 test of § 42(g)(1). If the income of occupants in low-income
units exceeds 140 percent of the applicable income limitation, the temporary
occupancy of a unit by a displaced individual will not cause application of
the available unit rule under § 42(g)(2)(D)(ii). In addition, the
project owner is not required during the temporary housing period to make
attempts to rent to low-income individuals the low-income units housing displaced
individuals. All other rules and requirements of § 42 will continue
to apply.

At the end of the temporary housing period established by the Florida
Housing Finance Corporation, the applicable income limitations contained in
§ 42(g)(1), the available unit rule under § 42(g)(2)(D)(ii),
and the requirement to make reasonable attempts to rent vacant units to low-income
individuals resume.

The suspension of income limitations is subject to the requirements
listed below.

REQUIREMENTS FOR SUSPENSION OF INCOME LIMITATIONS

To qualify for the suspension of income limitations, the project owner
must meet all of the following requirements:

(1) Major Disaster Area

The displaced individual must have resided in a Florida county designated
for Individual Assistance by FEMA as a result of Hurricane Charley, Frances,
Ivan, or Jeanne.

(2) Approval of Florida Housing Finance Corporation

The project owner must obtain approval from the Florida Housing Finance
Corporation to obtain the relief described in this notice. The Florida Housing
Finance Corporation will determine the appropriate period of temporary housing
for each project, not to extend beyond September 30, 2005.

(3) Certifications and Recordkeeping

To comply with the requirements of § 1.42-5, project owners
are required to maintain and certify certain information concerning each displaced
individual temporarily housed in the project, specifically: name, address
of damaged home, social security number, and a statement signed under penalties
of perjury by the displaced individual that, because of damage to the individual’s
home in a Florida county designated for Individual Assistance by FEMA as a
result of Hurricane Charley, Frances, Ivan, or Jeanne, the individual requires
temporary housing. The owner must also certify the date the individual began
temporary occupancy and the date the project will discontinue providing temporary
housing as established by the Florida Housing Finance Corporation. The certifications
and recordkeeping for displaced individuals must be maintained as part of
the annual compliance monitoring process with the Florida Housing Finance
Corporation.

(4) Rent Restrictions

Rent for the low-income units housing displaced individuals must not
exceed the existing rent-restricted rates for the low-income units established
under § 42(g)(2).

(5) Protection of Existing Tenants

Existing tenants in occupied low-income units cannot be evicted or have
their tenancy terminated as a result of efforts to provide temporary housing
for displaced individuals.

EFFECTIVE DATE

This notice is effective August 13, 2004 (the date of the President’s
major disaster declaration as a result of Hurricane Charley).

EFFECT ON OTHER DOCUMENTS

Notice 2004-66 is amplified and superseded.

PAPERWORK REDUCTION ACT

The collection of information contained in this notice has been reviewed
and approved by the Office of Management and Budget (OMB) in accordance with
the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1907.

An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the collection of information
displays a valid OMB control number.

The collection of information in this notice is in the section titled
“REQUIREMENTS FOR SUSPENSION OF INCOME LIMITATIONS,” under “(3)
Certifications and Recordkeeping.” This information is required
to enable the Service and the Florida Housing Finance Corporation to verify
that individuals obtaining temporary housing in approved low-income housing
projects are displaced from their homes in a Florida county designated for
Individual Assistance by FEMA as a result of Hurricane Charley, Frances, Ivan,
or Jeanne.

This information will be used in the Florida Housing Finance Corporation’s
compliance monitoring processes. The collection of information is required
to obtain a benefit. The likely respondents are individuals, businesses,
and nonprofit institutions.

The estimated total annual recordkeeping burden is 1,700 hours.

The estimated annual burden per recordkeeper is approximately 15 minutes.
The estimated number of recordkeepers is 6,800.

Books or records relating to a collection of information must be retained
as long as their contents may become material to the administration of the
internal revenue law. Generally, tax returns and tax return information are
confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal author of this notice is Jack Malgeri of the Office of
the Associate Chief Counsel (Passthroughs and Special Industries).For further
information regarding this notice, contact Mr. Malgeri at (202) 622-3040 (not
a toll-free call).